Exhibit 10.1


 


STOCKHOLDERS AGREEMENT


 


This STOCKHOLDERS AGREEMENT, dated as of December 15,
2009, is between Facet Biotech Corporation, a Delaware corporation (the “Company”), and Biotechnology Value
Fund, L.P., Biotechnology Value Fund II, L.P., BVF Investments, L.L.C.,
Investment 10, L.L.C., BVF Partners L.P., BVF Inc. and Mark N. Lampert
(collectively, the “BVF Entities”).


 


RECITALS:


 


WHEREAS, as of the date hereof, the BVF Entities
Beneficially Own (as defined below) an aggregate of 3,683,521 shares of common
stock, par value $0.01 per share, of the Company (“Common Stock”),
including the associated rights to purchase shares of Series A Preferred
Stock of the Company (“Rights”) issued pursuant to the Rights Agreement
(as defined below), which represents approximately 14.7% of the shares of
Common Stock outstanding as of the date hereof;


 


WHEREAS, pursuant to the terms of the Rights
Agreement, the Rights will become exercisable under certain circumstances,
including if a person becomes an Acquiring Person (as defined in the Rights
Agreement) by acquiring Beneficial Ownership (as defined below) of 15% or more
of the outstanding shares of Common Stock; and


 


WHEREAS, the BVF Entities desire to have the ability
to purchase additional shares of Common Stock and have requested that the
Company amend the terms of the Rights Agreement so as to permit the BVF
Entities to purchase such shares without causing the Rights to become
exercisable, and the Board has determined that it is in the best interest of
the Company’s stockholders to enter into such an amendment;


 


NOW, THEREFORE, in consideration of the foregoing
premises and of the mutual covenants and obligations hereinafter set forth, the
parties hereto hereby agree as follows:


 


ARTICLE
I



DEFINITIONS


 


Section 1.1.   Certain Defined Terms.  As used herein, the following terms shall
have the following meanings:


 


“Acquiring Person”
shall have the meaning set forth in the Rights Agreement.


 


“Affiliate” and “Associate”
shall have the meaning set forth in the Rights Agreement.


 


“Agreement” shall mean this Stockholders Agreement as it may be
amended, supplemented, restated or modified from time to time in accordance
with the terms hereof.


 


“Beneficial Owner”, “Beneficially
Own” and “Beneficial Ownership” shall have the meaning set forth in
the Rights Agreement.


 

















 


“Board” shall mean
the Company’s board of directors.


 


“Business Day” shall mean any day that is not a Saturday, a
Sunday or other day on which banks are required or authorized by law to be
closed in New York, New York or San Francisco, California.


 


“BVF Group” shall
mean the BVF Entities, and all Affiliates and Associates of the BVF Entities.


 


“BVF Ownership Percentage” shall mean,
at any time, the percentage of the outstanding shares of Common Stock
Beneficially Owned by the BVF Group.


 


“Common Stock” shall
have the meaning set forth in the Recitals.


 


“Exchange Act” shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder from time
to time.


 


“Effective Date” shall
have the meaning set forth in Section 2.1.


 


“Exempted Shares”
shall have the meaning set forth in Section 2.2.


 


A Person shall be deemed the
“Full Owner” of, shall be deemed to “Fully Own” and shall be
deemed to have “Full Ownership” of, any securities if such Person not
only Beneficially Owns such securities but also owns all economic and pecuniary
interest in such securities and retains all voting rights (other than the proxy
granted to the Company pursuant to this Agreement), with there being no hedging
transaction, derivative transaction or other transaction resulting in any form
of synthetic ownership of such securities by any other Person (other than
broad-based index options, broad-based index futures and broad-based publicly
traded market baskets of stock approved for trading by the appropriate federal
government authority).


 


“Grantee” shall have
the meaning set forth in Section 3.2.


 


“Person” shall mean any individual, corporation, limited
liability company, limited or general partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, other entity,
government or any agency or political subdivision thereof or any group pursuant
to Section 13(d)(3) of the Exchange Act comprised of two or more of
the foregoing.


 


“Proportionate Voting”
shall have the meaning set forth in Section 3.1.


 


“Recommended Voting”
shall have the meaning set forth in Section 3.1.


 


“Rights” shall have
the meaning set forth in the Recitals.


 


“Rights Agreement”
shall mean the Rights Agreement, dated as of September 7, 2009, between
the Company and Mellon Investor Services LLC, as Rights Agent, as it may be
amended, supplemented, restated or modified from time to time in accordance
with the terms hereof and thereof, or any successor rights agreement adopted
substantially concurrently with the termination thereof or with the redemption
of the Rights.


 


“Rights Amendment”
shall have the meaning set forth in Section 2.1.


 


2

















 


“Subject Shares” shall mean as of a given date that number of
shares of Common Stock, if any, by which the aggregate Beneficial Ownership by
the BVF Group of shares of Common Stock exceeds fifteen percent (15%) of the
outstanding shares of Common Stock on such date.


 


“Transfer” shall mean, directly or indirectly, to sell,
transfer, assign, pledge, encumber, hypothecate or similarly dispose of (by
operation of law or otherwise), either voluntarily or involuntarily, or to
enter into any contract, option or other arrangement or understanding with
respect to the sale, transfer, assignment, pledge, encumbrance, hypothecation
or similar disposition of (by operation of law or otherwise), any Common Stock
or any interest in any Common Stock, including by tendering (or announcing an
intention to tender) into any tender offer, regardless of whether such Common
Stock or interest is purchased pursuant to such tender offer.  For purposes of this Agreement, the term
Transfer shall include the sale of an Affiliate or Associate of any BVF Entity
or the BVF Entity’s interest in an Affiliate or Associate that Beneficially
Owns shares of Common Stock.


 


Section 1.2.  
Methodology for Calculations.  For
all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including any calculation for
purposes of determining the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) under the
Exchange Act as in effect on the date hereof.


 


ARTICLE
II



ACQUISITION OF EXEMPTED SHARES


 


Section 2.1.  
Amendment of Rights Agreement.  If
the Rights are still then redeemable pursuant to Section 23 of the Rights
Agreement, the Company agrees to adopt an amendment to the Rights Agreement in
the form attached as Exhibit A hereto (the “Rights Amendment”) as
soon as practicable after execution hereof, and in any event within one (1) Business
Day of the date of this Agreement (the date of effectiveness of such Rights
Amendment, the “Effective Date”), which Rights Amendment will provide
that the acquisition by the BVF Entities of the Exempted Shares, subject to the
terms and conditions provided herein and in the Rights Amendment, will not result
in any BVF Entity becoming an Acquiring Person.


 


Section 2.2.  
Exempted Shares Definition.  The “Exempted
Shares” (a) shall consist of one share less than such number as would
result in a BVF Ownership Percentage of twenty percent (20%) and (b) must (i) consist
solely of shares of Common Stock, and not include any common stock equivalents
or derivative securities and (ii) be Fully-Owned by the BVF Entities.


 


ARTICLE
III



VOTING


 


Section 3.1.  
Voting .  Each of the BVF Entities
hereby irrevocably and unconditionally agrees that during the term of this
Agreement, so long as the BVF Ownership Percentage is equal to or greater than
fifteen percent (15%), at any meeting of the stockholders of the Company,
however called, including any adjournment or postponement thereof, and in
connection with any written consent of the stockholders of the Company, each
BVF Entity shall, 


 


3

















 


and
shall cause all Affiliates and Associates which Beneficially Own any Subject
Shares to, in each case to the fullest extent that such matters are submitted
for the vote or written consent of the Stockholder and that the Subject Shares
are entitled to vote thereon or consent thereto, vote (or cause to be voted),
in person or by proxy, or deliver (or cause to be delivered) a written consent
covering, all of the Subject Shares as to which such BVF Entity controls the
right to vote either (i) in the same proportion as the stockholders of the
Company other than the BVF Group vote with respect to such matter (voting in
such manner, “Proportionate Voting”) or (ii) in accordance with the
recommendation of the Board to the stockholders of the Company with respect to
such matter (voting in such manner, “Recommended Voting”).  All Subject Shares must be voted in
Proportionate Voting or Recommended Voting as provided in this Section 3.1,
with the BVF Entities having the right to make the election between
Proportionate Voting and Recommended Voting, provided that if no such election
is made by the BVF Entities, Proportionate Voting shall apply.  The obligations of the BVF Entities specified
in this Section 3.1 shall apply whether or not any action is recommended
by the Board.


 


Section 3.2.  
Irrevocable Proxy.  Each of the
BVF Entities hereby irrevocably appoints as its proxy, Andrew Guggenhime and
Francis Sarena, in their respective capacities as officers of the Company, and
any individual who shall hereafter succeed to any such officer of the Company,
and any other Person designated in writing by the Company  (collectively, the “Grantees”), each
of them individually, with full power of substitution, to vote or execute
written consents solely with respect to the Subject Shares in accordance with Section 3.1
hereof and, in the discretion of the Grantees, with respect to any proposed
adjournments of any annual or special meetings of the stockholders of the
Company.  This proxy is coupled with an interest and shall be irrevocable,
and each of the BVF Entities will take such further action or execute such
other instruments as may be necessary to effectuate the intent of this proxy
and hereby revokes any proxy previously granted by any BVF Entity with respect
to the Subject Shares that would otherwise conflict with the proxy granted by
this Section 3.2. The Company may terminate this proxy with respect to the
Stockholder at any time at its sole election by written notice provided to the
BVF Entities.  Notwithstanding anything to the contrary in this Agreement,
the proxy granted by this Section 3.2 shall terminate and be of no further
force and effect upon valid termination of this Agreement in accordance with Section 4.2
hereof.  Each BVF Entity hereby ratifies
and confirms all that such irrevocable proxy may lawfully do or cause to be
done by virtue hereof.  Any BVF Entity
that is not the record owner of the Subject Shares of which it is the
Beneficial Owner shall use reasonable efforts to cause the record owner of such
Subject Shares to execute and deliver an irrevocable proxy conforming to the
provisions of this Section 3.2.


 


Section 3.3.  
Quorum.  The BVF Entities shall be
under no obligation with respect to any shares of Common Stock that it
Beneficially Owns, other than the Subject Shares as provided in Section 3.1,
to be present in person or represented by proxy at any meetings of
securityholders of the Company or to vote such shares of Common Stock.


 


ARTICLE
IV



MISCELLANEOUS


 


Section 4.1.  
Conflicting Agreements.  Each
party represents and warrants that it has not granted and is not a party to any
proxy, voting trust or other agreement that is inconsistent with or conflicts
with any provision of this Agreement.


 


4

















 


Section 4.2.  
Termination.


 


(a)   This Agreement shall automatically terminate
upon the earlier of (i) expiration of the Rights Agreement or (ii) redemption
of the Rights by the Company except in connection with the substantially
concurrent adoption of a successor rights agreement.


 


(b)   Nothing in this Section 4.2 shall be
deemed to release any party from any liability for any willful and material
breach of this Agreement or to impair the right of any party to compel specific
performance by any other party of its obligations under this Agreement.


 


Section 4.3.  
Ownership Information.  The BVF
Entities shall deliver to the Company promptly (but in no event more than two (2) Business
Days) after any Transfer of shares of Common Stock, an accurate written report
specifying the shares of Common Stock Transferred in such transaction and the
number of shares of Common Stock owned by the BVF Group after giving effect to
such transaction; provided, however, that no such report need be
delivered with respect to any Transfer of shares of Common Stock by the BVF
Group that is reported in a statement on Schedule 13D or a Form 4 filed
with the Securities and Exchange Commission and delivered to the Company by the
BVF Entities in accordance with Section 13(d) or Section 16 of
the Exchange Act, as applicable.  The
Company shall be entitled to rely on the most recently delivered report,
statement on Schedule 13D, Form 4 or other notice for all purposes of this
Agreement, unless the BVF Entities shall have updated such information by
delivery of a subsequent report, statement on Schedule 13D, Form 4 or
notice.


 


Section 4.4.  
Amendment and Waiver.  This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto. 
The failure of any party to enforce any of the provisions of this
Agreement shall in no way be construed as a waiver of such provisions and shall
not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.


 


Section 4.5.  
Severability.  If any provision of
this Agreement shall be declared by any court of competent jurisdiction to be
illegal, void or unenforceable, all other provisions of this Agreement shall
not be affected and shall remain in full force and effect.


 


Section 4.6.  
Entire Agreement.  Except as
otherwise expressly set forth herein, this Agreement, the Rights Amendment and
the Rights Agreement embody the complete agreement and understanding among the
parties hereto with respect to the subject matter hereof and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, that may have related to the subject matter hereof in
any way.  Without limiting the generality
of the foregoing, to the extent that any of the terms hereof are inconsistent
with the rights or obligations of the BVF Entities under any other agreement
with the Company, the terms of this Agreement shall govern.


 


Section 4.7.  
Successors and Assigns.  Neither
this Agreement nor any of the rights or obligations of any party under this
Agreement shall be assigned, in whole or in part (except by operation of law
pursuant to a merger whose purpose is not to avoid the provisions of this
Agreement), by any party without the prior written consent of the other
party.  Subject to the foregoing, this
Agreement shall bind and inure to the benefit of and be enforceable by the
parties hereto and their respective successors and permitted assigns.


 


5

















 


Section 4.8.  
Counterparts.  This Agreement may
be executed in separate counterparts each of which shall be an original and all
of which taken together shall constitute one and the same agreement.


 


Section 4.9.  
Remedies.  Each party hereto
acknowledges that money damages would not be an adequate remedy in the event
that each and every one of the covenants or agreements in this Agreement are
not performed in accordance with their terms, and it is therefore agreed that,
in addition to and without limiting any other remedy or right it may have, the
non-breaching party will have the right to an injunction, temporary restraining
order or other equitable relief in any court of competent jurisdiction
enjoining any such breach and enforcing specifically each and every one of the
terms and provisions hereof.  Each party
hereto agrees not to oppose the granting of such relief in the event a court
determines that such a breach has occurred, and to waive any requirement for
the securing or posting of any bond in connection with such remedy.  All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise or beginning
of the exercise of any thereof by any party shall not preclude the simultaneous
or later exercise of any other such right, power or remedy by such party.


 


Section 4.10.  
Notices.  Any notice, request,
claim, demand or other communication under this Agreement shall be in writing,
shall be either personally delivered, sent by reputable overnight courier
service (charges prepaid), sent by facsimile to the address for such Person set
forth below or such other address as the recipient party has specified by prior
written notice to the other parties hereto and shall be deemed to have been
given hereunder on (i) the date of delivery if sent by messenger, (ii) on
the Business Day following the Business Day on which delivered to a recognized
courier service if sent by overnight courier or (iii) upon confirmation of
receipt, if sent by fax.


 


If to the Company:


 


Facet Biotech Corporation


1500 Seaport Boulevard


Redwood City, CA 94063


Attention: General Counsel

Fax: 650-454-2000


 


with a copy (which shall not
constitute notice) to:


 


Simpson Thacher &
Bartlett LLP


2550 Hanover Street

Palo Alto, CA 94304


Attention:  Richard
Capelouto


Kirsten Jensen


Fax: 650-251-5002


 


6

















 


If to the BVF Entities:


 


BVF Partners L.P.

900 North Michigan Avenue

Suite 1100

Chicago, Illinois 60611

Attention: Mark N. Lampert

Fax:


 


with a copy (which shall not
constitute notice) to:


 


Olshan Grundman Frome
Rosenzweig & Wolosky LLP

Park Avenue Tower

65 East 55th Street

New York, New York 10022

Attention: Adam W. Finerman, Esq.

Facsimile: (212) 451-2222


 


Section 4.11.  
Governing Law; Consent to Jurisdiction. 
This Agreement shall be governed in all respects by the laws of the
State of Delaware.  Any disagreement,
issue, dispute, claim, demand or controversy arising out of or relating to this
Agreement (each, a “Dispute”) shall be brought only in the Court of
Chancery of the State of Delaware.  Each
of the parties hereby irrevocably consents to the jurisdiction of such court
(and of the appropriate appellate court therefrom) in any such Dispute and
irrevocably waives, to the fullest extent permitted by law, any objection that
it may now or hereafter have to the laying of the venue of any such Dispute in
such court and that any such Dispute which is brought in such court has been
brought in an inconvenient forum. 
Process in any such Dispute may be served on any party anywhere in the
world, whether within or without the jurisdiction of any such court.  Without limiting the foregoing, each party
agrees that service of process on such party as provided in Section 4.10
shall be deemed effective service of process on such party.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT
OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.


 


Section 4.12.  
Change in Law, Etc.  In the event any law, rule or
regulation comes into force or effect (including by amendment) which conflicts
with the terms and conditions of this Agreement, or any court of competent
jurisdiction shall issue a final, non-appealable order invalidating or
enjoining the performance of any provision hereof, the parties shall negotiate
in good faith to revise this Agreement to achieve the parties’ intention set
forth herein.


 


Section 4.13.  
Interpretation.  The headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.  Whenever the words “include”, “includes” or “including”
are used in this Agreement, they shall be deemed to be followed by the words “without
limitation”.  The words “hereof “, “herein”
and “hereunder” and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and Article, Section and Exhibit references are to this
Agreement unless otherwise specified. 
The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.


 


7
















 


IN WITNESS WHEREOF, the
parties hereto have executed this Stockholders Agreement as of the date first
written above.


 


FACET
BIOTECH CORPORATION


 


 


	
  By:

  	
  /s/ Faheem Hasnain

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Faheem Hasnain

  	
   

  	
   

  	
   

  
	
  Title:

  	
  President
  and CEO

  	
   

  	
   

  	
   

  



 


	
  BIOTECHNOLOGY
  VALUE FUND, L.P.

  	
   

  	
  INVESTMENT
  10, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  BVF
  Partners L.P., its general partner

  	
   

  	
  By:

  	
  BVF
  Partners L.P., its investment manager

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  BVF
  Inc., its general partner

  	
   

  	
  By:

  	
  BVF
  Inc., its general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Mark N. Lampert

  	
   

  	
  By:

  	
  /s/
  Mark N. Lampert

  
	
   

  	
  Mark
  N. Lampert

  	
   

  	
   

  	
  Mark
  N. Lampert

  
	
   

  	
  President

  	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BIOTECHNOLOGY
  VALUE FUND II, L.P.

  	
   

  	
  BVF
  PARTNERS L.P.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  BVF
  Partners L.P., its general partner

  	
   

  	
  By:

  	
  BVF
  Inc., its general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  BVF
  Inc., its general partner

  	
   

  	
  By:

  	
  /s/
  Mark N. Lampert

  
	
   

  	
   

  	
   

  	
   

  	
  Mark
  N. Lampert

  
	
  By:

  	
  /s/
  Mark N. Lampert

  	
   

  	
   

  	
  President

  
	
   

  	
  Mark
  N. Lampert

  	
   

  	
   

  	
   

  
	
   

  	
  President

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BVF
  INVESTMENTS, L.L.C.

  	
   

  	
  BVF
  INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  BVF
  Partners L.P., its manager

  	
   

  	
  By:

  	
  /s/
  Mark N. Lampert

  
	
   

  	
   

  	
   

  	
   

  	
  Mark
  N. Lampert

  
	
  By:

  	
  BVF
  Inc., its general partner

  	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Mark N. Lampert

  	
   

  	
   

  	
   

  
	
   

  	
  Mark
  N. Lampert

  	
   

  	
   

  	
   

  
	
   

  	
  President

  	
   

  	
   

  	
   

  



 


8

















 


EXHIBIT A


 


AMENDMENT TO RIGHTS AGREEMENT


 


This Amendment to Rights
Agreement (this “Amendment”) is entered into as of December 15,
2009 by and between Facet Biotech Corporation, a Delaware corporation (the “Company”),
and Mellon Investor Services LLC, a New Jersey limited liability company, as
Right Agent (the “Rights Agent”).


 


RECITALS:


 


WHEREAS, the Company and the Rights Agent have
previously entered into a Rights Agreement dated as of September 7, 2009
(the “Agreement”; capitalized terms used but not defined herein shall
have the meaning set forth in the Agreement);


 


WHEREAS, pursuant to Section 27
of the Agreement, for so long as the Rights are redeemable, the Company may in
its sole and absolute discretion amend any provision of the Agreement in any
respect without the approval of any holders of the Rights, as evidenced by a
writing signed by the Company and the Rights Agent;


 


WHEREAS, as of the date
hereof, the Rights are redeemable; and


 


WHEREAS, the Board of
Directors has deemed it fair, desirable and in the best interests of the
Company and its stockholders to allow the acquisition by certain existing
Company stockholders of additional shares of Common Stock without any such
stockholder becoming an Acquiring Person, and to amend the Agreement
accordingly as set forth below to permit such transaction, and has duly
authorized any officer of the Company to execute and deliver this Amendment.


 


NOW, THEREFORE, in consideration of the premises and
mutual agreements hereinafter set out and of other consideration (the receipt
and sufficiency of which are acknowledged), the parties hereto agree as
follows:


 


1.     Amendment of Section 1(a) of
the Agreement.  The definition of “Acquiring
Person” in Section 1(a) of the Agreement is hereby amended and
supplemented by adding the following sentences at the end thereof:


 


“Notwithstanding anything
contained in this Section 1(a) to the contrary, solely in the case of
any Person who is one of the BVF Entities (as defined below) and with respect
to no other Person: (A) a reference to “20%” shall be substituted for each
reference to “15%” in the foregoing provisions of this Section 1(a), so as
to permit the Beneficial Ownership of up to 20% of the Common Stock of the
Company by such BVF Entities pursuant to, and only if the BVF Entities are
acting in compliance with, the terms of the Stockholders Agreement, dated as of
December 15, 2009 between the Company and the BVF Entities (as the same
may be amended from time to time, the “Stockholders Agreement”) and (B) in
the event that the BVF Ownership Percentage is greater than 15% and less than
20%, in the event of any Transfer (as defined below) by a BVF Entity, upon the
occurrence of any such Transfer such references shall automatically be deemed
replaced by references to the then-current BVF Ownership Percentage plus one
share of Common Stock, solely to the extent such then-current BVF Ownership
Percentage is both lower than the previously applicable BVF Ownership
Percentage and less than 20%,


 

















 


unless and until such
then-current BVF Ownership Percentage is less than 15%, at which time all such
references shall revert to “15%” and no additional changes shall be made
pursuant to this clause (B).  For
purposes of this definition:  “BVF
Entities” shall mean Biotechnology Value Fund, L.P., Biotechnology Value
Fund II, L.P., BVF Investments, L.L.C., Investment 10, L.L.C., BVF Partners
L.P., BVF Inc. and Mark N. Lampert; “BVF Ownership Percentage” means, at
any time, the percentage of the outstanding Common Stock Beneficially Owned in
the aggregate by the BVF Entities and all Affiliates and Associates thereof as
of such time; and solely as used in this Section 1(a), “Transfer”
shall mean, directly or indirectly, to sell, transfer, assign, pledge,
encumber, hypothecate or similarly dispose of (by operation of law or
otherwise), either voluntarily or involuntarily, or to enter into any contract,
option or other arrangement or understanding with respect to the sale,
transfer, assignment, pledge, encumbrance, hypothecation or similar disposition
of (by operation of law or otherwise), any Common Stock or any interest in any
Common Stock, including by tendering (or announcing an intention to tender)
into any tender offer, regardless of whether such Common Stock or interest is
purchased pursuant to such tender offer, and for such purpose the term “Transfer”
shall include the sale of an Affiliate or Associate of any BVF Entity or the
BVF Entity’s interest in an Affiliate or Associate that Beneficially Owns
shares of Common Stock.”


 


2.     Governing
Law.  This Amendment and the Agreement, as
amended hereby, shall be governed by and construed in accordance with the laws
of the State of Delaware, provided, however,
that all provisions regarding the rights, duties, obligations and liabilities
of the Rights Agent shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and to be performed
entirely within such state.


 


3.     Effect of Amendment.  Except as expressly modified hereby, the
Agreement remains in full force and effect. 
Upon the execution and delivery hereof, as of the day and year first
above written, the Agreement shall thereupon be deemed to be amended and
supplemented as hereinabove set forth as fully and with the same effect as if
the amendments and supplements made hereby were originally set forth in the
Agreement, and this Amendment and the Agreement shall henceforth be read, taken
and construed as one and the same instrument, but such amendments and
supplements shall not operate so as to render invalid or improper any action
heretofore taken under the Agreement.


 


4.     Descriptive Headings.  Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose.


 


5.     Counterparts.  This Amendment may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Amendment and all of which, when taken together, will be deemed to constitute
one and the same agreement.  The exchange
of copies of this Amendment and of signature pages by facsimile or
electronic transmission shall constitute effective execution and delivery of
this Amendment as to the parties hereto and may be used in lieu of the original
Amendment for all purposes.  Signatures
of the parties hereto transmitted electronically or by facsimile shall be
deemed to be their original signatures for all purposes.


 


6.     Severability.  If any term, provision or restriction of this
Amendment is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the 


 


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remainder of the
terms, provisions or restriction of this Amendment shall remain in full force
and effect and shall in no way be affected, impaired or invalidated.


 


[Signature Page Follows]


 


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IN WITNESS WHEREOF, the
parties hereto have caused this Amendment to be executed as of the day and year
first above written.


 


	
   

  	
  FACET BIOTECH CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MELLON INVESTOR SERVICES LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  Asa Drew

  
	
   

  	
  Title:

  	
  Vice President &
  Senior Relationship

  
	
   

  	
   

  	
  Manager

  



 


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